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Original article
Impact of cigarette taxation policy on excise revenues and cigarette
consumption in Uzbekistan
Shukhrat U Shukurov, Konstantin S Krasovsky
BACKGROUND: In 2012,Uzbekistanratified the Framework Convention on Tobacco
Control, which states that price and tax measures are an effective means of
reducing tobacco consumption. We aimed to explore the effect of taxation
policies on revenues and cigarette consumption.
METHODS: Data on tax rates, revenues, cigarette sales were taken from national
reports. To forecast potential revenues, a scenario analysis was performed.
RESULTS: In 1991-2004, ad valorem excise system was in place in Uzbekistan,
which was later replaced by the specific excise system. In 1997-2011, the
nominal average excise has increased by a factor of twenty, but in real terms,
after a sharp increase in 1999, average excise declined annually and increased
only in 2010-2011. Annual cigarette sales per capita of adult population in
1999-2007 constituted 17-25 cigarette packs, while in 2008-2011 it increased to
30-37 packs. Four scenarios of excise tax increases in 2012 were developed: one
actual scenario based on the rates effective in Uzbekistan in 2012, and three
hypothetical ones anticipating excise rates increase by 1.5, 2 and 3-fold. With
actual excise increase in 2012, the inflation-adjusted budget revenues would
grow by 5%, and with three hypothetical - by 17%, 35% and 66% respectively,
despite the decline of tax-paid cigarette sales.
CONCLUSION: Stabilization or reduction in cigarette excises in Uzbekistan in
2002-2008 led to a decline in real excise revenues and the growth of cigarette
sales. In 1999 and 2010-2011, excises were significantly increased and the real
revenues have risen, despite the decline in cigarette sales. As cigarette prices
are low, the illegal outflow of cigarettes from Uzbekistan apparently exceeds
the illegal inflow. A significant increase in cigarette excise (1.5-3 fold) can
both increase budget revenues and reduce cigarette consumption, with greater
increase yielding more benefits.
KEYWORDS: Uzbekistan; tobacco; excise; cigarettes; revenue.
Full text (pdf) in English
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